SEMI-ANNUAL REPORT
May 31, 1999
[GRAPHIC OMITTED: CRUELTY FREE VALUE FUND LOGO]
THE
CRUELTY FREE
VALUE FUND
[GRAPHIC OMITTED: LIGHTHOUSE LOGO]
Beacon Global Advisors, Inc.
THE CRUELTY FREE VALUE FUND
Beacon Global Advisors, Inc.
4550 Montgomery Avenue, Suite 302 North
Bethesda, MD 20814
May 31, 1999
Dear Shareholder:
I am pleased to provide you with the second semi-annual report of the
Cruelty Free Value Fund for the six-month period from November 30, 1998
through May 31, 1999.
During this period the Fund increased in value from $1.7 million to $2.0
million. The Net Asset Value per share increased from $27.31 to $29.45
or 7.84% exceeding the 2.03% posted by the Russell 2000 Index of small-
capitalization stocks. Following a superb 1998-year in performance, the
Cruelty Free Value Fund continued in 1999 with solid returns. We are
encouraged to see the broadening of the U.S. equity market beyond the
top 50 largest stocks, into the medium and smaller companies. This is a
positive for our fund.
Performance for the Cruelty Free Value Fund rebounded strongly in the
second calendar quarter of 1999, up 11.5%. The three-month period was
the first in several years where smaller capitalization stocks
outperformed their large stock counterparts. For example, the S&P 500
rose just 7% in the quarter compared to 15.5% for the Russell 2000
Index. This is a much healthier environment for our equity markets.
The Fund continues to emphasize three areas of the market that we
believe exhibit the best value characteristics. Financial services
represent about 25% of the Fund with particular emphasis on the small to
medium size regional banks. We think there will continue to be
acquisitions made by larger financial institutions - potentially
targeting several of the Fund's holdings. We are also pleasantly
surprised to see a number of technology companies falling into our value
criteria. Small niche companies have the flexibility to produce products
that are the leading edge in this field. The final area that we are
emphasizing is the consumer products area. A strong domestic economy
moving forward will be driven by consumer spending. We have seen this in
the past 12 months and should continue to witness it over the next 12-24
months.
The balance of the Fund remains well diversified across industries and
specific company shares.
Your Fund's management thanks you for your support of the Cruelty Free
Value Fund as it continues its dedication to providing an investment
program to help end the suffering, abuse and extinction of animals and
at the same time provide an outstanding investment opportunity. We are
exceeding in these goals.
Please direct inquiries or questions to Beacon Global Advisors, Inc. at
(800) 662-9992.
Sincerely,
/S/RICHARD A. OLLEN
Richard A. Ollen
President and Chairman of the Board
The Cruelty Free Value Fund
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<CAPTION>
The Cruelty Free Value Fund
Schedule of Investments (Unaudited)
May 31, 1999
- ----------------------------------------------------------------------------------------
<S> <C>
Value
Shares (Note 2)
- -------- --------
COMMON STOCK - 80.20%
ADVERTISING - 2.00%
2,100 R.H. Donnelley Corp. $39,900
----------------
AUDIO VIDEO PRODUCTS - 1.67%
1,800 Boston Acoustics, Inc. 33,300
----------------
BASIC MATERIALS & PROCESSING - 6.79%
1,200 AK Steel Holding Corp. 28,800
800 Ball Corp. 38,950
1,800 Dell Webb Corp. 40,500
1,800 General Cable Corp. 27,337
----------------
135,587
----------------
COMPUTER SERVICES & SOFTWARE - 1.87%
9,400 GT Interactive Software Corp.* 37,307
----------------
CONSUMER DISCRETIONARY - 8.44%
800 Harman International Industries, Inc. 35,500
3,000 Heilig-Myers Co. 20,813
1,700 Reynolds & Reynolds Co. 37,188
1,000 Tommy Hilfiger Corp.* 75,063
----------------
168,564
----------------
ELECTRONIC SERVICES - 4.97%
3,500 Sensormatic Electronics Corp. 46,813
700 Tek-Sym Corp.* 15,356
1,600 Tektronix, Inc. 37,100
----------------
99,269
----------------
ENTERTAINMENT & LEISURE - 5.07%
1,680 Mattel, Inc. 44,415
1,400 Young Broadcasting Company* 56,875
----------------
101,290
----------------
FINANCIAL SERVICES - 22.93%
1,168 Associated Banc-Corp. 40,442
1,090 Astoria Financial Corp. 49,050
2,700 Colonial BancGroup, Inc. 34,762
1,500 Compass Bancshares, Inc. 44,391
900 Dain Rauscher Corp. 46,856
2,800 Doral Financial Corp. 47,250
1,100 LandAmerica Financial Group, Inc. 31,556
1,050 North Fork Bancorporation, Inc. 22,378
1,000 Peoples Heritage Financial Corp. 18,750
1,820 Sovereign Bancorp, Inc. 24,001
3,075 Roslyn Bancorp, Inc. 55,734
1,600 United Bancshares, Inc. 42,700
----------------
457,870
----------------
HOME FURNISHINGS - 2.39%
1,500 Ethan Allan Interiors, Inc. 47,813
----------------
MEDICAL PRODUCTS - 0.79%
1,000 Maxxim Medical, Inc.* 15,875
----------------
PRODUCERS DURABLES - 4.70%
1,050 Burr-Brown Corp.* 33,600
1,700 Flowserve Corp. 34,850
1,500 Watts Industries, Inc. 25,406
----------------
93,856
----------------
TECHNOLOGY - 8.58%
2,000 3 DFX Interactive, Inc.* 38,750
4,000 InaCom Corp.* 44,250
2,100 Scientific-Atlanta, Inc. 74,156
1,800 Western Digital Corp. 14,175
1,800 Western Digital Corp. Rights.* --
----------------
171,331
----------------
TRANSPORTATION - 10.00%
2,200 Airborne Freight Corp. 56,925
1,500 Avis Rent A Car, Inc.* 43,031
1,200 Borg-Warner Automotive, Inc. 66,525
1,300 Fleetwood Enterprises, Inc. 33,069
1,300 Fleetwood Enterprises, Inc. Rights* --
----------------
199,550
----------------
Total Common Stock (Cost $1,360,560) - 80.20% 1,601,512
----------------
MISCELLANEOUS ASSETS - 10.69%
Evergreen MM Corefund (Cost $213,374) 213,374
----------------
Total Investments (Cost $1,573,934) - 90.89% $1,814,886
----------------
Other Assets and Liabilities, Net - 9.11% 181,999
----------------
NET ASSETS - 100.00% $1,996,885
================
* Non-income producing security.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Cruelty Free Value Fund
Statement of Assets and Liabilities (Unaudited)
May 31, 1999
- ----------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at market (identified cost $1,573,934) $1,814,886
Receivables:
Dividends and interest 3,346
Capital stock sold 7,586
Due from Advisor 138,613
Deferred unamortized organization costs (Note 1) 41,669
Other assets 2,416
----------------
TOTAL ASSETS 2,008,516
----------------
LIABILITIES:
Payables:
Capital stock redeemed 3,831
Accrued distribution fees 833
Accrued expenses 6,967
----------------
TOTAL LIABILITIES 11,631
----------------
NET ASSETS:
Applicable to 67,795 shares; unlimited number of shares
of beneficial interest authorized with no par value $1,996,885
================
NET ASSETS CONSIST OF:
Paid-in capital 1,836,338
Undistributed net investment loss (4,097)
Accumulated realized loss on investments (76,308)
Net unrealized gain on investments 240,952
----------------
NET ASSETS $1,996,885
================
Net Asset Value, offering and redemption price per share $29.45
================
See notes to financial statements.
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<TABLE>
<CAPTION>
The Cruelty Free Value Fund
Statement of Operations
- ----------------------------------------------------------------------------------------
<S> <C>
For the
Six Months Ended
May 31, 1999
(Unaudited)
----------------
INVESTMENT INCOME:
Interest $3,466
Dividends 10,091
----------------
TOTAL INVESTMENT INCOME 13,557
----------------
EXPENSES:
Investment advisory fees 11,510
Administration fees 9,972
Accounting fees 8,524
Custodian fees 2,229
Amortization of organizational expenses (Note 1) 7,125
Professional fees 8,776
Transfer agency fees 7,480
Printing expense 10,779
Registration fees 13,945
Insurance 595
Distribution expense 2,302
Trustees' fees 1,000
Other 4,549
----------------
Total expenses before fee waivers 88,786
Reimbursement from Investment Advisor (71,132)
----------------
TOTAL EXPENSES, NET 17,654
----------------
NET INVESTMENT LOSS (4,097)
----------------
REALIZED & UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 78,594
Net change in unrealized appreciation on investments 69,545
----------------
148,139
----------------
Net increase in net assets resulting from operations $144,042
================
See notes to financial statements.
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<TABLE>
<CAPTION>
The Cruelty Free Value Fund
Statement of Changes in Net Assets
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Six Months Ended
May 31, 1999 Year Ended
(Unaudited) November 30, 1998
---------------- -----------------
OPERATIONS:
Net investment loss $(4,097) $(5,330)
Net realized gain (loss) on investments 78,594 (155,342)
Net change in unrealized appreciation on investments 69,545 101,607
---------------- -----------------
Net increase (decrease) in net assets resulting from operations 144,042 (59,065)
---------------- -----------------
Distributions to shareholders from:
Net realized gains -- (12,783)
---------------- -----------------
-- (12,783)
---------------- -----------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 347,683 904,817
Proceeds from shares issued to holders in reinvestment
of dividends -- 11,990
Cost of shares redeemed (159,822) (348,378)
---------------- -----------------
Net increase in net assets from Fund share transactions 187,861 568,429
---------------- -----------------
Increase in net assets 331,903 496,581
---------------- -----------------
NET ASSETS:
Beginning of period 1,664,982 1,168,401
---------------- -----------------
End of period $1,996,885 $1,664,982
================ =================
(a) Transactions in capital stock were:
Shares sold 12,428 31,212
Shares reinvested -- 449
Shares redeemed (5,588) (12,496)
---------------- -----------------
Increase in shares outstanding 6,840 19,165
================ =================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Cruelty Free Value Fund
Financial Highlights
- ----------------------------------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock outstanding throughout the
periods presented.
<S> <C> <C> <C>
Six Months Ended April 29, 1997*
May 31, 1999 Year Ended through
(Unaudited) November 30, 1998 November 30, 1997
---------------- ----------------- -----------------
Net Asset Value - Beginning of Period $27.31 $27.96 $25.00
---------------- ----------------- -----------------
Investment Operations:
Net investment income (0.07) (0.09) (0.05)
Net realized and unrealized gain (loss)
on investments 2.21 (0.26) 3.01
---------------- ----------------- -----------------
Total from investment operations 2.14 (0.35) 2.96
---------------- ----------------- -----------------
Distributions:
From net investment income -- -- --
From net realized capital gains -- (0.30) --
---------------- ----------------- -----------------
Total distributions -- (0.30) --
---------------- ----------------- -----------------
Net Asset Value - End of Period $29.45 $27.31 $27.96
================ ================= =================
Total Return 7.84% (1.23)% 11.84%1
Ratios/Supplemental Data
Net assets, end of period (in 000's) $1,997 $1,665 $1,168
Ratio of expenses to average net assets:
Before expense reimbursement 9.81%2 12.79% 29.69%2
After expense reimbursement 1.95%2 1.95% 1.95%2
Ratio of net investment income to
average net assets:
Before expense reimbursement (8.38)%2 (11.16)% (28.16)%2
After expense reimbursement (0.52)%2 (0.34)% (0.42)%2
Portfolio turnover rate 10.86% 21.70% 15.06%1
* Commencement of investment operations.
1 Not Annualized.
2 Annualized.
See notes to financial statements.
</TABLE>
The Cruelty Free Value Fund
Notes to Financial Statements (Unaudited) May 31, 1999
- ------------------------------------------------------------------------
Note 1 - Significant Accounting Policies
Beacon Global Advisors Trust (the "Trust") is organized as a Delaware
business trust pursuant to a Trust Agreement dated August 29, 1996. The
Trust is registered under the Investment Company Act of 1940 (the
"Act"), as amended, as an open-end, diversified management investment
company. The Trust is organized to offer separate series of shares and
is currently offering a single series of shares called The Cruelty Free
Value Fund (the "Fund"). The initial capitalization of the Fund,
$100,000, was provided on March 26, 1997 by Beacon Global Advisors,
Ltd., parent company of the investment advisor. The Fund commenced
investment operations on April 29, 1997. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles for investment companies.
Security Valuation. Investments in securities traded on a national
securities exchange are valued at the last reported sales price.
Unlisted securities, listed securities in which there were no sales, or
securities traded over-the-counter, are valued at the mean of the
closing bid and ask prices. When market quotations are not readily
available, securities and other assets are valued at fair value as
determined in good faith by the Board of Trustees. Short-term
obligations having a maturity of 60 days or less are valued at amortized
cost, which the Board of Trustees believes represents fair value.
Investment Income and Securities Transactions. Security transactions are
accounted for on the date the securities are purchased or sold (trade
date). Cost is determined and gains and losses are based on the
identified cost basis for both financial statement and federal income
tax purposes. Dividend income is reported on the ex-dividend date.
Interest income and expenses are accrued daily.
Organization Costs. Organization costs are being amortized on a straight
line basis over five years from commencement of operations.
Federal Income Taxes. It is the policy of the Fund to comply with all
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its taxable
income to its shareholders. Therefore, no Federal income tax provision
is required. Cost of securities for tax purposes is substantially the
same as for financial reporting purposes.
Distributions to Shareholders. The Fund intends to distribute
substantially all of its net investment income and capital gains, if
any, annually. Distributions to shareholders are recorded on the ex-
dividend date. Income and capital gain distribution are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles.
Use of Estimates. In preparing financial statements in conformity with
generally accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements, as well as the reported amount
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Note 2 - Purchase and Sale of Securities
Purchases and sales of securities, other than short term investments,
totaled $171,761 and $253,468, respectively, for the period ended May
31, 1999. Net unrealized appreciation of investments at May 31, 1999
includes aggregate unrealized appreciation of $340,015 and unrealized
depreciation of $99,063.
Note 3 - Investment Management Fee and Other Transactions with
Affiliates
Beacon Global Advisors, Inc. (the "Advisor"), a registered investment
advisor, provides the Fund with investment management services. For
providing investment advisory services, the Fund pays the Advisor a
monthly fee which is calculated by applying the following annual rates:
1.25% of the average daily net assets of the first $100 million, 1.00%
of the average daily net assets from $100 million to $500 million, and
0.75% of average daily net assets over $500 million. To assist in the
selection and management of the Fund's investment securities, the
Advisor has entered into a subadvisory agreement with Delta Capital
Management, Inc. ("Delta"). Delta was appointed sub-advisor by the Board
of Trustees on September 14, 1998, and serves subject to approval by the
Fund's Shareholders. The sub-advisor receives an annual fee equal to
0.50% of the first $50 million of the Fund's average daily net assets,
0.35% of the Fund's average daily net assets from $50 million to $100
million, and 0.25% of the Fund's average daily net assets in excess of
$100 million.
The Advisor has voluntarily agreed to waive its fees and reimburse the
Fund to the extent total annualized expenses exceed 1.95% of the Fund's
average daily net assets. For the period ended May 31, 1999, advisory
fees of $11,510 were incurred to the Advisor and the Fund incurred
$71,132 of expenses reimbursable by the Advisor. Certain Officers and
trustees are affiliated persons of the Advisor. All Officers serve
without direct compensation from the Fund. Officers, Trustees and
affiliated persons of The Cruelty Free Value Fund directly control
23,719 shares, or 34.8% of the Fund, including one shareholder who owns
29.7%.
Due from Advisor at May 31, 1999 includes approximately $44,000, which
the Advisor claims to have previously paid to the Fund. However, the
Advisor believes this payment was erroneously not applied against amouts
due from the Advisor by First Data Investor Services Group, Inc. which
performed accounting and other administrative services to the Fund
through October 31, 1998. The Advisor intends to investigate this matter
and has agreed to guarantee the payment of the entire amount reflected
as Due from Advisor in the financial statements.
Excluding the investment advisory fee, other expenses incurred during
the period ended May 31, 1999 totaled $77,276, of which $25,976
represents fees charged for administration, transfer agent, accounting
and shareholder services. These services are provided by Declaration
Service Company.
The Fund has adopted a distribution plan (the "Plan"), pursuant to Rule
12b-1 under the Act which permits the Fund to pay certain expenses
associated with the distribution of its shares. The Plan provides that
the Fund will reimburse Beacon Global Advisors, Inc. (the
"Distributor"), the Fund's sole underwriter and distributor, for actual
distribution and shareholder servicing expenses incurred by the
Distributor not exceeding, on an annual basis, 0.25% of the Fund's
average daily net assets. For the period ended May 31, 1999, the Fund
reimbursed the Distributor $2,302 for distribution costs incurred.
INVESTMENT ADVISOR
Beacon Global Advisors, Inc.
4550 Montgomery Avenue
Suite 302 North
Bethesda, MD 20814
DISTRIBUTOR
Beacon Global Advisors, Inc.
4550 Montgomery Avenue
Suite 302 North
Bethesda, MD 20814
SHAREHOLDER SERVICES
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428
CUSTODIAN
First Union National Bank
530 Walnut Street
Philadelphia, PA 19101-7618
LEGAL COUNSEL
Kirkpatric & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, District of Columbia 20036-1800
AUDITORS
Johnson Lambert & Co.
7500 Old Georgetown Road #700
Bethesda, MD 20814
For Additional Information about
The Cruelty Free Value Fund call
(800) 892-9626
@http://www.crueltyfree.com
This report is submitted for general information of the shareholders of
the fund. It is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective Prospectus
which includes details regarding the Fund's objectives, policies.,
expenses and other information.
BEACON GLOBAL ADVISORS, INC.
